TORONTO, Nov. 13, 2024 (GLOBE NEWSWIRE) -- Hudbay Minerals Inc. ("Hudbay” or the "company”) (TSX, NYSE: HBM) today released its third quarter 2024 financial results. All amounts are in U.S. dollars, unless otherwise noted. All production and cost amounts reflect the Copper Mountain mine on a 100% basis, with Hudbay owning a 75% interest in the mine.

"Our enhanced operating platform delivered strong operating and financial results with record gold production in Manitoba and robust cost control across the business leading to expanded margins,” said Peter Kukielski, President and Chief Executive Officer. "The third quarter demonstrated Hudbay's unique copper and gold diversification, providing attractive free cash flow generation and strong leverage to higher metal prices. New quarterly record throughput levels were achieved at the New Britannia mill, higher throughput rates were realized at Constancia, and Copper Mountain delivered record high copper recoveries. We are again improving our 2024 consolidated cash cost guidance as we continue to perform ahead of expectations. We have successfully delivered five consecutive quarters of meaningful free cash flow generation, positioning us well to continue to advance our many growth initiatives and unlock significant value in our pipeline to further enhance our copper exposure.”

Delivered Strong Third Quarter Operating and Financial Results, Led by Record Gold Production from Manitoba Operations; 2024 Production Guidance Reaffirmed and Cost Guidance Further Improved

  • Achieved consolidated copper production of 31,354 tonnes, in line with quarterly production cadence, and gold production of 89,073 ounces, far exceeding expectations, in the third quarter of 2024, representing an increase of 10% and 52%, respectively, from the second quarter of 2024.
  • Enhanced operating platform delivered strong quarterly performance with record gold production at the Manitoba operations, the completion of planned stripping activities at Pampacancha in Peru and the benefits from stabilization and optimization initiatives at the Copper Mountain mine in British Columbia.
  • Reaffirmed full year 2024 consolidated production guidance for all metals. Full-year consolidated copper production expected to trend towards the lower end of the guidance range and consolidated gold production expected to trend towards the higher end of the guidance range.
  • Strong operating cost performance with consolidated cash costi and sustaining cash costi per pound of copper produced, net of by-product creditsi, in the third quarter of 2024 of $0.18 and $1.71, respectively, an improvement of 84% and 35%, respectively, from the second quarter of 2024.
  • Further improved 2024 annual operating cost guidance with decreased consolidated cash costi guidance range of $0.65 to $0.85 per pound, an additional improvement from the previously updated guidance range of $0.90 to $1.10 per pound, and decreased consolidated sustaining cash cost guidance range of $1.75 to $2.20 per pound from original guidance of $2.00 to $2.45 per pound, as a result of increased exposure to gold by-product credits and continued strong cost control across all operations.
  • Peru operations continued to benefit from strong mill throughput, achieving a quarterly average of approximately 88,000 tonnes per day in the third quarter. The Pampacancha stripping program to advance to higher grades was completed in late September and is on track to achieve higher copper and gold grade ore in the fourth quarter. Peru operations produced 21,220 tonnes of copper and 20,331 ounces of gold in the third quarter of 2024, in line with quarterly cadence expectations. Peru cash cost per pound of copper produced, net of by-product creditsi, was $1.80 in the third quarter and is expected to improve in the fourth quarter of 2024 with continued strong cost control and higher copper and gold production. 
  • Manitoba operations produced 62,468 ounces of gold in the third quarter of 2024, far exceeding management's quarterly cadence expectations and achieving record quarterly production levels as New Britannia continues to operate well above nameplate and budgeted throughput levels and the Lalor mine continues to achieve better-than-expected gold grades. Manitoba cash cost per ounce of gold produced, net of by-product creditsi, was $372 during the third quarter of 2024, a decrease of 52% compared to the second quarter of 2024. Full-year Manitoba gold production is expected to exceed the top end of the 2024 guidance range.
  • British Columbia operations produced 6,736 tonnes of copper at a cash cost per pound of copper produced, net of by-product creditsi, of $1.81 in the third quarter of 2024. Achieved record quarterly copper recoveries of 84% and strong unit cost performance as a result of the successful operational stabilization efforts as mine stripping activities accelerate and mill optimization initiatives are underway. Full-year British Columbia copper production is expected to be slightly below the lower end of the 2024 guidance range.
  • Achieved revenue of $485.8 million and operating cash flow before change in non-cash working capital of $186.3 million in the third quarter of 2024. Strong financial results were driven by higher realized gold prices as well as robust gold production in Manitoba, while delivering on higher recovery, throughput and cost control initiatives across all business units.
  • Third quarter net earnings attributable to owners and earnings per share attributable to owners were $49.8 million and $0.13, respectively. After adjusting for items on a pre-tax basis such as a non-cash gain of $2.0 million related to a quarterly revaluation of the closed site environmental reclamation provision, a $5.2 million mark-to-market revaluation loss on various instruments such as the gold prepayment liability, unrealized strategic gold and copper hedges, investments and share-based compensation and a $2.2 million write-down of PP&E, among other items, third quarter adjusted earningsi per share attributable to owners was $0.13.
  • Adjusted EBITDAi was $206.2 million during the third quarter of 2024, a 42% increase compared to the second quarter of 2024.
  • Cash and cash equivalents and short-term investments increased by $233.5 million to $483.3 million during the first nine months of 2024 due to a successful equity offering and strong operating cash flows bolstered by higher copper and gold prices, which enabled a $412.1 million reduction in net debti during the first nine months of 2024.
Accelerated Deleveraging and Improved Balance Sheet Flexibility

  • Hudbay's unique copper and gold diversification in Peru and North America provides exposure to higher copper and gold prices and attractive free cash flow generation.
  • While a majority of revenues continue to be from copper, gold is representing an increasing portion of total revenues at 36% in the third quarter of 2024 and 33% year-to-date, compared to 27% and 26%, respectively, for the same periods in 2023, driven by higher gold production and strong leverage to higher gold prices.
  • During the third quarter of 2024, deleveraging efforts continued with additional open market purchases of approximately $48.5 million of Hudbay's senior unsecured notes in July and August 2024 at a discount. Long-term debt reduced to $1,108.9 million at September 30, 2024 from $1,287.5 million at December 31, 2023.
  • On August 30, 2024, Hudbay completed the final monthly payment to settle the gold prepayment liability that was used to fund the refurbishment of the New Britannia gold mill. The elimination of the gold prepayment liability will further increase the company's exposure to higher gold production in Snow Lake.
  • Impressive operating cash flow before change in non-cash working capital generation of $186.3 million despite lower realized copper prices compared to the second quarter of 2024, capitalizing on higher gold production from Manitoba following the full repayment of the gold prepayment liability in August.
  • Achieved trailing 12 month adjusted EBITDAi of $839.8 million, a substantial increase from $498.5 million for the 12 months ending September 30, 2023.
  • Reduced net debti to $625.6 million in the third quarter of 2024. The third quarter represents the fifth consecutive quarter of lower net debt as a result of deleveraging efforts and capitalizing on strong operating cash flow generation.
  • The increase in cash and reduction in long-term debt significantly reduced the company's net debt to adjusted EBITDAi to 0.7x at September 30, 2024 compared to 1.6x at the end of 2023, well within the targeted 1.2x net debt to adjusted EBITDAi ratio outlined in the three prerequisites plan (the "3-P plan") for advancing Copper World, including receipts of permits, a robust definitive feasibility study plan and a prudent financing strategy.
  • Total liquidity substantially increased by 58% to $907.7 million at September 30, 2024 from $573.7 million at the end of 2023.
  • Subsequent to the quarter end, further improved long-term balance sheet resilience with a proactive three-year extension of the company's senior secured revolving credit facilities from October 2025 to November 2028. The extended credit facilities provide increased financial flexibility to accretively maintain the 4.50% coupon 2026 senior unsecured notes outstanding to maturity and advance Copper World towards a sanctioning decision in accordance with the 3-P plan. The $450 million revolving credit facility includes an improved pricing grid reflecting the enhanced financial position of Hudbay and features an opportunity to increase the facility by an additional $150 million at Hudbay's discretion during the four-year tenor, providing additional financial flexibility.
Advancing Growth Initiatives to Further Enhance Copper and Gold Exposure

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  • The successful completion of the planned stripping program at Pampacancha in September is expected to lead to significantly higher copper and gold grades in the fourth quarter of 2024, which together with maintaining strong operating performance at Constancia is expected to continue to generate meaningful free cash flow in Peru.
  • The New Britannia mill continued to exceed expectations, driving continued strong gold production and free cash flow generation in Manitoba. The New Britannia mill achieved record throughput levels of approximately 2,080 tonnes per day in the third quarter, exceeding its original design capacity of 1,500 tonnes per day and its 2024 budgeted capacity of 1,800 tonnes per day due to the successful implementation of process improvement initiatives and effective preventative maintenance measures.
  • Hudbay has successfully implemented post-acquisition plans to stabilize the Copper Mountain operations through mining fleet ramp-up activities and increased mill reliability and performance. Achieved record mill availability of 95% and record copper recoveries of 84% in the third quarter of 2024. Efforts are now focused on optimizing the operations through execution of the planned accelerated stripping program and mill throughput improvement projects.
  • Received the Aquifer Protection Permit for Copper World in August, a key milestone and de-risking event in the advancement of the project. Continued to progress the 3-P plan for sanctioning Copper World, with transformed balance sheet near targeted levels and the remaining key state permit progressing on track. As disclosed in August, Hudbay commenced activities related to the preparation of feasibility studies for Copper World, resulting in an expected increase of $25 million in growth capital spending in Arizona.
  • Drill permitting for highly prospective Maria Reyna and Caballito properties near Constancia continues to advance through the multi-step regulatory process with the environmental impact assessment applications approved for Maria Reyna in June and Caballito in September.
  • The development of an access drift to the 1901 deposit in Snow Lake remains on track to reach mineralization in early 2025 and is intended to enable confirmation of the optimal mining method for the deposit and underground drilling to further evaluate the orebody and upgrade inferred gold resources to reserves. Initiated the development of an adjacent haulage drift to de-risk planned full production in 2027.
  • Large 2024 exploration program continues in Snow Lake with eight drill rigs testing targets near Lalor and regional satellite properties. Includes follow-up drilling at Lalor Northwest located 400 metres from Lalor's underground infrastructure and the testing of a deep geophysical target at the Cook Lake North property.
  • Continuing to advance Flin Flon tailings reprocessing opportunities through metallurgical test work and early economic evaluation to assess the possibility of producing critical minerals and precious metals while reducing the environmental footprint.
Summary of Third Quarter Results

Consolidated copper production of 31,354 tonnes in the third quarter of 2024 increased by 10% from the second quarter of 2024, in line with the mine plan expectations. Consolidated gold production of 89,073 ounces in the third quarter exceeded expectations and increased by 52% from the second quarter of 2024. Stronger gold production was driven by higher gold grades and mill throughput in all operations, but most notably at the New Britannia mill in Manitoba. With the completion of the planned stripping program in Peru at the end of the third quarter, post-quarter production results have already delivered higher grades as mining of the high-grade zones at Pampacancha is underway, in line with the mine plan.

In the third quarter of 2024, consolidated cash cost per pound of copper produced, net of by-product creditsi, was $0.18, compared to $1.14 in the second quarter of 2024. This decrease was mainly the result of significantly higher by-product credits, higher copper production and strong cost control leading to lower mining, milling, treatment and refining costs. Consolidated sustaining cash cost per pound of copper produced, net of by-product creditsi, was $1.71 in the third quarter of 2024 compared to $2.65 in the second quarter of 2024. This decrease was primarily due to the same reasons outlined above partially offset by higher cash sustaining capital expenditures. Consolidated all-in sustaining cash cost per pound of copper produced, net of by-product creditsi, was $1.95 in the third quarter of 2024, lower than $3.07 in the second quarter of 2024 due to significant gold by-product credits and continued strong cost control across all operations.

Cash generated from operating activities of $146.2 million increased by 6% in the third quarter of 2024 compared to the second quarter of 2024. Operating cash flow before change in non-cash working capital was $186.3 million during the third quarter of 2024, reflecting a 53% increase compared to the second quarter of 2024. The increase in operating cash flows before change in non-cash working capital was primarily the result of higher gold production and sales volumes in Manitoba, strong operational cost performance across the business and higher realized gold prices. Third quarter adjusted EBITDAi was $206.2 million, a 42% increase compared to $145.0 million in the second quarter of 2024 and was impacted by the same factors affecting operating cash flow as noted above.

Net earnings attributable to owners in the third quarter of 2024 was $49.8 million, or $0.13 per share, compared to net loss attributable to owners in the second quarter of 2024 of $16.6 million, or $0.05 per share, which was impacted by various non-cash charges for unrealized losses on strategic copper and gold hedges and revaluation of share-based compensation due to a higher share price.

Adjusted net earnings attributable to ownersi in the third quarter of 2024 were $50.3 million, or $0.13 per share, after adjusting for items on a pre-tax basis such as a non-cash gain of $2.0 million related to a quarterly revaluation of closed site environmental reclamation provision, a $5.2 million mark-to-market revaluation loss on various instruments such as the gold prepayment liability, unrealized strategic gold and copper hedges, investments and stock based compensation and a $2.2 million write-down of PP&E, among other items. This compares to adjusted net earnings attributable to ownersi of $0.1 million, or nil per share, in the second quarter of 2024.

As at September 30, 2024, total liquidity was $907.7 million, including $443.3 million in cash and cash equivalents, $40.0 million in short-term investments as well as undrawn availability of $424.4 million under the company's revolving credit facilities. Net debti declined to $625.6 million at the end of the third quarter of 2024 compared to $1,037.7 million at the end of 2023.

Consolidated Financial Condition ($000s)Sep. 30, 2024Jun. 30, 2024Dec. 31, 2023
Cash and cash equivalents and short-term investments483,273523,767249,794
Total long-term debt1,108,9001,155,5751,287,536
Net debt1625,627631,8081,037,742
Working capital2434,346423,793135,913
Total assets5,508,0755,442,4225,312,634
Equity32,537,8452,482,5452,096,811
Net debt to adjusted EBITDA1,40.70.81.6
Net debt and net debt to adjusted EBITDA are non-IFRS financial performance measures with no standardized definition under IFRS. For further information, please see the "Non-IFRS Financial Performance Measures" section of this news release.
2 Working capital is determined as total current assets less total current liabilities as defined under IFRS and disclosed on the consolidated interim financial statements.

3 Equity attributable to owners of the company.
4 Net debt to adjusted EBITDA for the 12 month period.
 

Consolidated Financial Performance Three Months Ended
  Sep. 30, 2024Jun. 30, 2024Sep. 30, 2023
Revenue$000s485,773425,520480,456
Cost of sales$000s345,987347,893374,057
Earnings (loss) before tax$000s79,70144184,149
Net (loss) earnings$000s50,354(20,377)45,490
Net (loss) earnings attributable to owners$000s49,762(16,583)45,125
Basic earnings (loss) per share1$/share0.13(0.05)0.13
Adjusted earnings (loss) per share1,2$/share0.130.000.07
Operating cash flow before change in non-cash working capital$ millions186.3122.0182.0
Adjusted EBITDA2$ millions206.2145.0190.7
1 Attributable to owners of the company.

2 Adjusted earnings (loss) per share attributable to owners and adjusted EBITDA are non-IFRS financial performance measures with no standardized definition under IFRS. For further information, please see the "Non-IFRS Financial Performance Measures” section.
 

Consolidated Production and Cost Performance Three Months Ended
  Sep. 30, 2024Jun. 30, 2024Sep. 30, 2023
Contained metal in concentrate and doré produced1    
Coppertonnes31,35428,57841,964
Goldounces89,07358,614101,417
Silverounces985,569738,7071,063,032
Zinctonnes8,0698,08710,291
Molybdenumtonnes362369466
Payable metal sold    
Coppertonnes27,76025,79939,371
Gold2ounces73,23261,29574,799
Silver2ounces663,413667,036748,955
Zinctonnes8,6075,1337,125
Molybdenumtonnes343347426
Consolidated cash cost per pound of copper produced3    
Cash cost $/lb0.181.141.10
Sustaining cash cost $/lb1.712.651.89
All-in sustaining cash cost$/lb1.953.072.04
1 Metal reported in concentrate is prior to deductions associated with smelter contract terms.
2 Includes total payable gold and silver in concentrate and in doré sold.
3 Cash cost, sustaining cash cost and all-in sustaining cash cost per pound of copper produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information, please see the "Non-IFRS Financial Performance Measures” section of this news release.
 
2024 Production Guidance Reaffirmed and Cash Cost Guidance Further Improved

Hudbay reaffirms its full year 2024 consolidated production guidance for all metals as the company continues to deliver strong operating performance and expects the fourth quarter to be the highest copper production quarter in 2024, in line with the company's quarterly cadence expectations. The company expects 2024 consolidated copper production to trend towards the lower end of the guidance range and 2024 consolidated gold production to trend towards the higher end of the guidance range.

In Peru, the fourth quarter is expected to be the strongest quarter this year, and full year copper production is expected to trend towards the lower end of the guidance range, while gold production is expected to trend towards the higher end of the guidance range. In British Columbia, Hudbay expects to continue improving operating efficiencies in the fourth quarter, and full year copper production is expected to be slightly below the lower end of the guidance range, while full year gold production is expected to be within the guidance ranges.

In Manitoba, Hudbay expects the strong operating performance to continue into the fourth quarter, and full year gold production is now expected to exceed the top end of the guidance range and full year copper production is expected to trend towards the higher end of the guidance range.

Hudbay is again improving its full year 2024 consolidated cash cost guidance range to $0.65 to $0.85 per pound copper from the previously announced range of $0.90 to $1.10 per pound and the original guidance range of $1.05 to $1.25 per pound. The company is also improving its 2024 annual consolidated sustaining cash cost guidance range to $1.75 to $2.20 per pound copper from the original guidance range of $2.00 to $2.45 per pound. This is a result of increased exposure to gold by-product credits and continued strong cost control at all operations. The company has reaffirmed all other 2024 guidance metrics.

Peru Operations Review

Peru OperationsThree Months Ended
  Sep. 30, 2024Jun. 30, 2024Sep. 30, 2023
Constancia ore mined1 tonnes3,022,9315,277,6541,242,198
Copper%0.360.290.30
Goldg/tonne0.040.030.04
Silverg/tonne3.202.502.91
Molybdenum%0.020.010.01
Pampacancha ore mined1tonnes1,777,0921,288,7895,894,013
Copper%0.480.410.53
Goldg/tonne0.270.200.30
Silverg/tonne6.233.834.22
Molybdenum%0.010.020.02
Total ore minedtonnes4,800,0236,566,4437,136,211
Strip ratio4 2.621.741.36
Ore milledtonnes8,137,2487,718,9627,895,109
Copper%0.320.300.43
Goldg/tonne0.110.070.21
Silverg/tonne3.702.853.75
Molybdenum%0.010.010.02
Copper recovery%82.683.185.2
Gold recovery%68.1 Advertisement